LONDON (Reuters) - A multi-million dollar payment to a jailed German banker was an “insurance policy”, Formula One Chief Executive Bernie Ecclestone said on Wednesday, denying it was linked to the sale of a stake in the business to private equity firm CVC.
Billionaire Ecclestone is defending a $100 million damages claim brought by German media firm Constantin Medien who accuse him and three other defendants of deliberately undervaluing Formula One in the 2005 sale to safeguard his position as CEO.
The legal fallout from the sale of a controlling stake in the business to CVC is threatening Ecclestone’s four-decade hold on the glamorous motor sport and complicating stalled efforts to float it on the stock market in Singapore.
A Munich court in 2012 jailed Gerhard Gribkowsky, former chief risk officer at German bank BayernLB, for tax evasion and bribery for taking a $44 million payment after the 2005 sale.
Ecclestone, 83, said he paid Gribkowsky 10 million pounds ($16 million) but said that was because the German banker was threatening to make damaging claims about a family trust to the British tax authorities that could have cost him up to 2 billion pounds.
“What I paid him was a very small amount, what I call an insurance policy,” Ecclestone told a hearing at the High Court in London, calling it “quite a cheap insurance policy”.
He said there was no link to a deal in which CVC paid BayernLB $830 million for a 47 percent stake in Formula One. “This issue was nothing to do with anyone except Gribkowsky and myself, nobody else.”
Ecclestone has run Formula One for four decades, turning it into a money-spinner with annual revenue of around $2 billion generated by races held around the world watched by hundreds of millions of TV viewers.
A German court is due to decide next year whether Ecclestone himself should stand trial on bribery charges linked to the Gribkowsky payment. Ecclestone denies any wrongdoing.
Giving evidence in the damages case brought by Constantin Medien, Ecclestone repeated previous statements that he was being put under pressure by Gribkowsky who he feared would make false claims about his tax affairs.
He denied misleading Formula One board members including Martin Sorrell, chief executive of advertising group WPP, and Peter Brabeck, chairman of Nestle, about payments to Gribkowsky.
“It wasn’t the slightest concern of theirs,” he said. “I paid him because I was being I said ‘shaken down’,” he added, saying this was what he had told the Formula One directors in 2011 after Gribkowsky had been arrested.
Constantin is the successor to German media firm and former shareholder EM.TV. It says it missed out on a share of the proceeds had the sale price for the stake exceeded $1.05 billion.
It argues that Ecclestone favoured a sale to CVC because it planned to keep him on as CEO of a business which he continues to run as a hands-on chief executive.
Questioned repeatedly in court about newspaper reports quoting him after the Gribkowsky arrest, Ecclestone said: “Most of these journalists should be working closely with, what’s his name, Jeffrey Archer,” referring to the best-selling author and former Member of Parliament.
Editing by David Holmes